LISTED semiconductor firm Phoenix Semiconductors Philippines Corp. (PSPC) said it invested bulk of its capital expenditure (capex) for the first half in the acquisition of memory card machinery to boost its production capacity.
In a statement, the company said it is on track with its capital spending program for this year, with nearly half of the full-year capex budget of P423 million already utilized.
It said P199 million was spent in the first half for its Phase 1 expansion, which involves improvements to its existing main factory at Clark Freeport. The facility caters exclusively to Samsung, its sole customer as an outsourced semiconductor assembly and test (OSAT) service.
Dongjoo Kim, PSPC vice president and chief finance officer, said P153.45 million of the P199 million capex spent so far went to the acquisition of production machinery for branded memory cards and for dual inline memory modules (DIMM), which increases the output capacity for both product categories.
He said the company is also producing memory modules for desktop and server computers, aside from its more familiar operation of producing flash memory cards for mobile phones, gadgets and digital cameras.
“When the capex program is completed in the existing facility during the year, production capacity will increase to about 90 million units and should drive the growth in revenues and earnings in the years to come,” Kim said.
“The capital program is a key element to securing the growth momentum of PSPC in 2015 and onwards,” he added.
Kim said the capital spending in the first half was funded by proceeds from an initial public offering in December which raised P1.1 billion and internally generated funds from operations.
PSPC said it has also completed the installation of a semi-automatic blister pack production line for Samsung. The secured digital (SD) memory products for Samsung are now a value-added service as the company used to ship loose flash cards without packaging. Full operation of the semi-automatic blister pack production line is expected this month.
The chip maker also has a Phase 2 expansion plan with a P7.74 billion budget. The Phase 2 expansion will include a new 146,363-square meter manufacturing facility on a leased property at the Clark Freeport Zone in Pampanga as well as acquisition of some machinery and production equipment.
Construction of the Phase 2 plant will start by the end of this year. The Phase 2 expansion will be funded more than 70 percent by bank credit facilities and the balance from the IPO proceeds.
PSPC said the new facility will “cater to non-Samsung global customers” and that “negotiations with a number of customers are currently ongoing.”
The company posted net income of $5.3 million in the first quarter of this year, up 26 percent from a year ago, while gross revenue increased 15 percent to $59.8 million.
Established in February 2011, PSPC is the local subsidiary of South Korean semiconductor giant STS Semiconductor & Telecommunications Co., Ltd. which supplies mostly DRAM chips to Samsung. STS Semiconductor also has presence in China through PSTS.